, as a price falls, the quantity demanded rises; and as a price rises, the quantity demanded falls:
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P | | \
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Above: a demand curve, where P = price, and Q = quantity. As a product increases in price (P1 to P2), the quantity demanded decreases (Q1 to Q2), while as the price is lowered(P2 to P1), the quantity demanded rises (Q2 to Q1).
The demand curve can shift to the left or the right by a change in anything but price: taste, number of buyers, income, prices of related goods, and expectations.
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P | \ \ \
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| D3 D1 D2
Above: D1 is the original demand curve. D2 is an increase in demand, while D3 is a decrease in demand.
There are three types of related goods:
The law of demand is based on the substitution effect: at a lower price, buyers have the incentive to substitute what is now a less expensive product for similar products that are now relatively more expensive.